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In Episode 80 of the Toronto Under Construction Podcast, host Ben Myers sits down with Bader Elkhatib (CentreCourt), Christopher Wein (Equiton), and Kevin Stark (Trinity Group) to discuss the latest trends shaping the Greater Toronto Area housing market. The conversation covers new condo sales forecasts, investor sentiment, foreign investment, and rental projections, offering deep insights into where the market is headed.
New Condo Sales & Land Acquisitions
Ben starts by sharing his 2025 new condo sales forecast, predicting 6,300 sales for the year—an improvement from the under 5,000 units expected in 2024. He also forecasts a 7% decline in the average asking price for new condos.
Ben turns to Bader at CentreCourt and asks how this forecast aligns with their internal discussions. Tune in at 4:03 for Bader’s thoughts, where he agrees with Ben’s sentiments and provides further insights into CentreCourt’s market expectations.
Next, Ben asks Christopher about his experience actively looking for land in today’s market. At 6:54, Christopher shares what it’s like making acquisitions in this challenging environment.
Turning to Kevin, Ben asks about Trinity Group’s high-density lands currently in the zoning process, inquiring about their strategy for bringing these sites to market. At 9:06, Kevin provides an update on Trinity’s approach.
Investor Market: Will They Return?
Ben shifts the discussion to investor sentiment, reading an article from the Globe and Mail (Dec 2, 2024) titled: Investors Have Fled Pre-Construction Condos and No One Knows When They Are Coming Back.
“With preconstruction condo units no longer soaring in value every year and rent no longer covering the cost of owners’ loan payments and other expenses, many investors say they have no plans to buy more units. Waning investor interest is raising questions about whether the market will ever return to its previous strength, or if the current slump could represent a long-term structural shift for the preconstruction condo sector as burned investors look elsewhere for safer returns.”
Ben asks Christopher—who has worked for two of the GTA’s largest condo builders—about his thoughts on whether investors will return, and if so, when. At 21:39, Christopher shares his perspective, explaining the difference between investors and speculators and shares his thoughts on when the market may rebound.
Mortgage Qualification Struggles
Ben then references a Toronto Star article from Nov 26, 2023, I No Longer Qualify for a Mortgage on My Pre-Construction Property. What Are My Options?
“People need to understand the recourse that could be taken against them from the builder for not closing,” says Daniel Vyner, principal broker at Toronto-based DV Capital. “People are willing to finance or refinance, even if it’s at higher interest rates, to avoid breach of contract, even if some just need to close and then turn around and list and sell in some cases.”
“For those who can’t close, one option is to assign a contract to someone else, or sell your contract to someone else before the property is registered,” says real estate agent Mark Savel. “You have to offer a steep discount” to sell an assigned property. He also suggests co-signing a mortgage or, as a last resort, taking out a private mortgage.
Ben asks Bader about CentreCourt’s investor relationships and whether they are hesitant to take legal action against buyers struggling to close. At 29:42, Bader shares how CentreCourt qualifies its buyers and fosters long-term relationships with investors.
Foreign Investment & Housing as Infrastructure
The group then shifts to discussing foreign investment, asking: Why does Canada hate foreign investment? At 38:36, Bader shares his views on the importance of immigrants, but argues that if Canada is going to bring in 1.2 million immigrants a year, we need to focus on infrastructure like health care, education, employment, homes etc.
The guys discuss housing as infrastructure and Chris mentions what people forget is that when buildings are built, tens of millions of dollars are being inputted into external infrastructure like roads, sewers, community centres, parks, etc. Development Charges don’t benefit the people that live in the building, they go to benefit the community as a whole. Tune in at 43:43 for the discussion.
At 45:12, Ben asks Kevin to share his insights on foreign investment, where Kevin details a fund for non-residents of Canada.
Rent Projections & AI-Driven Research
Ben then reads from a press release (Oct 2, 2024) about Concordia University’s AI-driven rental market research, which was commissioned by Equiton.
“Written by Dr. Erkan Yönder, Associate Professor of Real Estate and Finance, and his team at Concordia, the report aims to support the policymakers, investors, and innovators working to address the housing crisis.
Estimates indicate the average two bedroom monthly rent in Toronto will reach $5,600 (a 72% increase compared to 2023) in under 10 years.
More supply doesn’t necessarily lead to lower rents, defying traditional economic expectations. Rental growth in most major markets will continue to accelerate until annual housing completions reach approximately 6% of total dwellings. In the GTA, that is nearly six to seven times the levels achieved in 2023.
In the GTA, annual housing completions must reach an astounding 11% of the total number of dwellings (nearly 10 times the rate achieved in 2023) before supply levels result in a reduction in rents.
Elevated rent levels are largely driven by immigration. Findings show that a 1% increase in the share of immigrants in a market increases local rents by approximately 0.6%. Meanwhile, a 1% increase in non-permanent residents can increase local rents by 2%.”
Ben asks Christopher whether he believes rent will rise 72% over the next decade. At 48:31, Christopher challenges the projections and discusses rental supply and affordability.
The group discusses the economics and trends of housing touching on the size of units, construction costs, mega towers vs. boutique buildings, interest rates and the amount of learning that has come out of this market.
Before wrapping up, Ben asks Bader if CentreCourt is still actively looking for sites and how they are approaching acquisitions. At 106:22, Bader explains CentreCourt’s strategy, stating: “Our thesis is that the GTA is a great place to live.”
Rapid Fire Questions
Ben then moves to rapid-fire portion of the episode asking questions like: Do we still need the mortgage stress test? Pierre Poilievre pledges to remove GST from purchase of new homes sold for under $1M, is that the right price level? In order to keep units affordable, we’re had to make them smaller, take away their parking spaces, and now we’re taking away balconies. What is the next sacrifice tenants will be forced to make? Should the Toronto planning department force developers to include retail at grade? In terms of the headaches they cause you, which is a better municipality to deal with, Toronto or Ottawa? What is the probability that we get GST and HST removed on new condo projects in the GTA in 2025? Many economists are expecting downward pressure on the Canadian dollar with a Trump presidency, can local developers source all their construction materials locally? And more! Tune in now to Toronto Under Construction. And more! Tune in now to Episode 80 of Toronto Under Construction for expert insights on investors, housing policies, and rent trends in the GTA!
